The SPDR S&P Biotech ETF (XBI) biotech index is up +13% in a month vs S&P500 +5% and we think political rhetoric and fear about drug pricing legislation which has been one of the primary overhangs on biotech stocks could be starting to move behind us as we go into H2:16. Indeed, given the large correction in the past year and rotation out of biotech, we think the market is starting to get more comfortable with the political environment and this could be an important shift and one of the key factors in driving stocks higher and removing the overhang. With large cap EPS now complete for Q2 for the majority of the big cap biotechs (Celgene, Alexion, Biogen, Amgen all beat and/or raised…), there is some increased confidence given H1 underperformance. Near-term risks are the iShares Nasdaq Biotechnology (IBB) (more smid cap than SPDR S&P Biotech ETF) is at upper end of its trading range – but the key is moving past the election/political rhetoric in H2. We find more bullish investors in fact think that if the Street thinks the election is an “overhang” to be removed in November – stocks may have already moved up before we get there…(or at least have lots of room to play “catch up” performance this year).

Shares of Amgen have ticked up 0.3% to $171.81 at 11:55 a.m. today, while Biogen has dipped 0.1% to $288.89, Celgene has advanced 0.4% to $111.75, Gilead Sciences has fallen 1.5% to $80.06, and Alexion Pharmaceuticals has declined 0.6% to $129.66. The iShares Nasdaq Biotechnology ETF has risen 0.3% to $288.54, and the SPDR S&P Biotech ETF has gained 1% to $61.89.

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Earnings reports, corporate strategies and analyst insights are all part of what moves stocks, and they’re all covered by the Stocks to Watch blog. We also look at macro issues, investor sentiments and hidden trends that are affecting the market. Stocks to Watch gives you the full picture of the U.S. stock markets, all day long.

The blog is written by Ben Levisohn, a former stock trader who has covered financial markets for the Wall Street Journal, Bloomberg and BusinessWeek.